DHL recently announced a major reorganization of its DHL
As usual, we will continue to provide updates to this and other industry development as they become available.
Please note that the opinions expressed herein are those of the individual commentator and do not necessarily represent those of PARCEL or its employees, nor should they be construed as endorsement by PARCEL.
DHL has attempted to become a key player in the
What is Changing
DHL Express (USA) is reducing the scope of their network and service partners. Some of these changes are as follows:
· Reducing local facilities by 34% (150+)
· Pick-up/Delivery Routes rationalized by 17%
· Ground Line haul Network rationalized by 18%
· 3600 zip codes will be delivered by the USPS (7.8% of all US Zip Codes)
· Closing the
· Moving Aviation Network to UPS
There are 46,000 zip codes in the
Impact to Shippers
DHLs customers will be experiencing a degradation of service over the next 6-12 months. As they fine tune their network, DHLs customers will learn to understand their new rationalized network and make decisions on which zip codes to give them. The utilization of UPS for their air network should improve the effectiveness and on-time performance of their network but it will go through a transition period which will negatively impact performance levels in the short term. Their international business will be impacted by these changes but once the package is out of the
Next 6 Months
The next 6 months will be a very challenging time for shippers and carriers. The soft economy and high fuel prices are adding to these pressures. Many customers are re-evaluating the value proposition that DHL brings to their supply chain. We are also seeing many customers looking at the USPS as they are offering more competitive Package services. The changes at DHL may spur the largest price increase (January 2009) in the history of the shipping industry in the
During these tenuous times, shippers are looking at all options in minimizing their cost increases and here are some examples:
1. Move some zip codes to Fed Ex or UPS (at a higher cost)
2. Put business out to Bid
3. Re-negotiate current contracts
4. Re-evaluate own shipping patterns
5. Make no changes (not recommended)
In summary, DHL is making these changes to improve their financial position and to be a stronger player in the
Michael J. Ryan is the VP Business Development Parcel Solutions at GENCO Supply Chain Solutions which specializes in reducing clients shipping cost from 5-20%. He has been in the parcel industry for 25 years and can be reached at 708-224-1498 or email@example.com.
For DHL's response, please click here.
For Jerry Hempstead's take on the subject on DHL's reorganization, please click here.
To read the USPS press release, please click here.
To read the UPS press release, please click here.